This is good news. From The Wall Street Journal:
"Now, after two years of rapid home-price depreciation, the relationship between the cost of rental payments versus after-tax mortgage payments is tilting toward ownership in a number of metropolitan areas.
Over the past 18 years, after-tax mortgage payments have averaged 26% more than rent payments, according to Green Street Advisors, a real-estate consultancy based in Newport Beach, Calif. In 2006, at the height of the housing bubble, mortgage payments reached as high as 66% more than rent payments. But by the end of 2008, average monthly rent for the largest 50 metropolitan areas was $1,045, compared with after-tax mortgage payments of $1,300, assuming a rate of 5.5% on a 30-year fixed mortgage. That means mortgage payments averaged just 24% more than rent payments, the narrowest gap since 2001."
END EXCERPT
This indicator has always been one of the best in predicting a revived housing market. If housing prices fall or rents rise to where the monthly payments are essentially equal, buyers start moving into the market at a much faster pace.
Additionally, interest rates are as low as they are going to get and will probably rise soon when the Fed tries to combat the coming high inflation that will result from the Government's massive spending and borrowing spree.
New housing starts are also at historic lows which means any new demand will reduce current supply and pressure prices upward, or at least stabilize them. New construction takes a long time and any significant increase in supply will lag behind a market revival by a year or two.
There is a window of opportunity here for anyone who is thinking of buying a home. Do it now with as much down payment as possible and get a FIXED RATE mortgage.
No comments:
Post a Comment